Question

North Safety Products manufactures butyl gloves that offer permeation resistance to gas or water vapors for workers who use dangerous chemicals like ketones. The company has fixed costs of $10 million for its butyl glove production and unit variable costs of $3 per pair. If the company charges $8 per pair, how many pairs of gloves must it sell to break even?

Answer 1

Answer:

2,000,000 units

Explanation:

Break-even units (BE) = Fixed cost /(P -VC )

P = price per share = $8

VC = variable cost per share = $3

Fixed cost = $10,000,000

Next, plug in the numbers to the formula;

BE = 10,000,000 / (8 -3)

BE = 2,000,000

Therefore, North Safety must sell at least 2,000,000 pairs of gloves.